Dusting off projects: Wind tax credit renewal aids region

From the Amarillo Globe News

The U.S. Congress helped the wind energy industry start the new year with hopes of continued expansion by passing a tax incentive in legislation meant to keep the country from going over the fiscal cliff.

The House of Representatives passed the American Taxpayer Relief Act of 2012 on Jan. 1 and included the production tax credit for any utility-scale wind project started in 2013.

“It has us dusting off projects we had put on the shelf,” said Walt Hornaday, chairman and president of Cielo Wind Energy. “I was impressed wind was in the bill with big-ticket items like Medicaid and the Farm Bill. It used to be wind wouldn’t have a chance to be included. I thought we’d be left out in the cold.”

Cielo has developed several of what it calls “wind ranches” in the Panhandle, including the Spinning Spur that began production in December northwest of Vega.

“There are still headwinds like cheap, $3 natural gas so, still, the economics are pretty tight,” Hornaday said. “It’s nice to have a year window to look at projects, but it’s too bad it’s just one year. At least we have something to talk about with utilities.”

As the wind industry has grown in the region, new transmission lines have connected the wind farms to consumers as far away as Kansas. Oklahoma and Missouri. Xcel Energy’s Southwestern Public Service is moving ahead with plans to add more, and Cross Texas Transmission and Sharyland Utilities are building lines to connect Panhandle wind projects with large cities downstate.

“The extension of the production tax credit will provide more clarity to wind developers to allow them to plan their projects,” said Cameron Fredkin, director of project development at Cross Texas. “The key provision in the extension is the requirement to begin construction in 2013 versus previous one-year extensions that
required wind developers to complete construction and begin operations in 2013. Wind developers in the Panhandle region in the interconnection study process would have had difficulty achieving commercial operations in 2013.”

While the company has not yet filed interconnection agreements between it and wind developers, its lines running from Childress to White Deer and Childress to near Silverton run through areas where wind companies have expressed interest in building.

Sharyland has filed two interconnection agreements at the Public Utility Commission. One is with RES America Developments for the proposed Longhorn Wind Energy Center in Briscoe County. It would have a capacity of up to 361 megawatts of electricity. The second is with E.On Climate & Renewables for a wind farm in Carson County with a capacity of 600 megawatts.

A megawatt is enough electricity to power about 350 average homes. However, a wind farm would only achieve its full capacity if the wind blew at a suitable speed 24 hours a day every day.

Class 4 Winds & Renewables, an area industry support group, is bullish about the timing of the credit extension.

“As plans to build thousands of megawatts of wind capacity throughout the Texas Panhandle begin to take shape, the extension of the Production Tax Credit is a step in the right direction to ensure that wind energy is a strong part of the Panhandle economy for years to come,” AJ Swope, executive director of the group, said in a written statement.

The American Wind Energy Association predicted that nationally up to 37,500 wind industry jobs would be lost without the tax credit, based on a study by Navigant Consulting. Most of those would have been in the manufacturing sector.

Locally, Alstom has been struggling to get its plant in the city-owned CenterPoint Business Park operating. It was supposed to be making nacelles, the housing with gears and controls that blades and a tower are attached to, in 2011 and create 275 jobs when at full capacity.

“They’re not doing much. They probably got to where they had a couple dozen employees, and now they’re down to four,” said Buzz David, president and CEO of Amarillo Economic Development Corp. which provided the company incentives. “Like everybody in the industry, they were waiting to see if the credits would come through and the economy would improve so they could get orders. Some companies like Vestas (in Colorado) laid off hundreds and hundreds of people.”

The city of Amarillo approved the AEDC plan to give Alstom $12.5 million in economic incentives, some of which the company is to repay based on how many jobs it creates.

“Their first performance measurement date is the end of this year,” David said. “We may have to look at it then.”

Alstom is optimistic.

“We believe the extension of the Production Tax Credit for wind power is a positive development for our company, our customers, and the many workers across the country employed directly and indirectly by the wind power industry,” said Andy Geissbuehler, head of Alstom’s North American wind business. “As an equipment supplier, we stand ready to provide the equipment that can be manufactured in our Amarillo facility to project developers across North America. We remain optimistic about the long-term market for wind power market in North America, especially now that the U.S. Production Tax Credit has been extended another year.”

Zarges Aluminum Systems left behind a $4.75-million, 80,000-square-foot facility in CenterPoint in April. The German company planned to produce wind tower components, such as ladders and platforms. A spokesman at the time blamed the recession and uncertainty about the tax credits as well as low natural gas prices for putting pressure on its customers and the company itself.